Please ensure Javascript is enabled for purposes of website accessibility

Zoom Earnings Crush Expectations: 5 Key Metrics You Should See

By Beth McKenna - Mar 1, 2021 at 8:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The videoconferencing specialist's guidance also zoomed by Wall Street's estimates.

Zoom Video Communications (ZM -6.87%) reported powerful fiscal fourth-quarter and full-year 2021 results on Monday after the market close. In the quarter, which ended on Jan. 31, the videoconferencing specialist's business continued to get a brisk tailwind from the COVID-19 pandemic, which has driven a surge in the number of people working, learning, and socializing from home. 

Shares (which went public in April 2019) are up 8.4% in Monday's after-hours trading session, as of 5:46 p.m. EST. We can attribute the market's delight to quarterly revenue and earnings crushing the Wall Street consensus estimates, and fiscal Q1 2022 guidance for both the top and bottom lines also easily surpassing analysts' expectations.

Below is an overview of Zoom's quarter, along with its outlook for first-quarter and full-year 2022.

Computer screen divided into quadrants with a different person's face in each one.

Image source: Getty Images.

1. Revenue jumped 369%

Zoom's fourth-quarter sales soared 369% year over year to $882.5 million. This result sped by the $811.8 million analysts were expecting, and the company's guidance of $806 million to $811 million. Growth was driven by the addition of new customers and expansion of the services the company provides to existing customers.

For context, in the prior two quarters, Zoom's revenue surged 367% (Q3) and 355% (Q2) year over year. For the full fiscal year, revenue rocketed 326% year over year to $2.65 billion.

Here's a look at key customer metrics:

Customer Metric

Fiscal Q4 2021

Change YOY

Customers with more than 10 employees

467,100

470%

Customers contributing revenue of more than $100,000 in trailing 12 months

1,644

156%

Trailing-12-month dollar expansion rate for customers with more than 10 employees

Above 130% (for the 11th consecutive quarter) 

N/A

Data source: Zoom Video Communications. YOY = year over year.

2. Adjusted operating income soared 839%

In Q4, income from operations under generally accepted accounting principles (GAAP) was $256.1 million, up 2,327% year over year. Adjusted for one-time items, operating income came in at $360.9 million, up 839% from the year-ago period.

3. Adjusted EPS surged 713%

GAAP net income for the quarter was $260.4 million, or $0.87 per share, up from $15.3 million, or $0.05 per share, in the year-ago period. Adjusted net income for the quarter landed at $365.4 million, or $1.22 per share, up 713% from $0.15 per share in the fourth quarter of fiscal 2020. 

Wall Street had been looking for Q4 adjusted earnings per share (EPS) of $0.79, so the company easily beat the profit expectation. It also zoomed by its own guidance of $0.77 to $0.79. 

4. Operating cash flow rocketed 933%

In Q4, operating cash flow grew 993% year over year to $399.4 million. Free cash flow increased more than 14 times to $377.9 million.

The company ended the period with cash and cash equivalents of $4.24 billion.

5. Fiscal Q1 2022 revenue is expected to jump 175%

For fiscal Q1 2022, Zoom management guided for revenue between $900 million and $905 million, representing growth of 175% year over year at the midpoint. It also expects adjusted EPS of $0.95 to $0.97 in the quarter, representing growth of 380% year over year at the midpoint.

Going into the report, Wall Street had been modeling for fiscal Q1 2022 adjusted EPS of $0.72 on revenue of $804.8 million. So Zoom's outlook on both the top and bottom lines sailed by analysts' expectations.

For full-year fiscal 2022, management expects revenue of $3.76 billion to $3.78 billion, and adjusted EPS of $3.59 to $3.65. At the midpoints, this outlook represents year-over-year revenue and adjusted EPS growth of about 42% and 8.4%, respectively.

Another fantastic quarter 

Zoom turned in fantastic Q4 results, which capped off a powerful fiscal-year 2021.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$84.69 (-6.87%) $-6.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.